The Nifty 50 closed on Friday 23 October at 22,600.00, down 546.15 points, or 2.36%, on the week. The Sensex fell 1,605.44 points, or 2.15%, to 73,123.83. The market was shut on Tuesday for Dussehra, and on each of the four days it traded, both indices fell.
A 2.4% week is uncomfortable but not unusual. The bigger story was underneath the headline. The Nifty Midcap 100 fell 5.6% and the Nifty Smallcap 100 fell 7.3%, reported as their worst week in 20 months. Forty-three of the fifty Nifty stocks ended lower.
Last week, and this week, from the same angle
A week ago we wrote about a narrow rally: the Nifty rose 2.78%, carried almost entirely by IT shares, while small caps rose 0.36%. Many investors felt their portfolio had a quieter week than the news. This week the same gap opened in the other direction, and it was wider. Most portfolios with a meaningful share in mid and small-cap funds will have fallen more than the index on the evening news.
Last week the index rose more than most portfolios. This week most portfolios fell more than the index.
What drove it
Three things came together. The week opened with results from the two largest private banks: HDFC Bank’s profit rose 4.6% to ₹19,509 crore and Axis Bank’s rose 38% to ₹7,003 crore, but both missed estimates, and Bank Nifty fell 2.78% over the week. Then oil: Brent crude rose 6.2% to settle at $116.72 a barrel, its highest close since April, after Houthi drone and missile attacks on Saudi Arabia, including the Shaybah oilfield. India imports most of its oil, so the price feeds directly into inflation, and the 10-year government bond yield rose to 7.47%. And among smaller companies, several results disappointed sharply: Swiggy fell 24.9% in the week and Himadri Speciality Chemical 25.5%.
Several companies reported large profit increases and still fell. Bajaj Finance’s profit rose 29% and the stock lost 5.4%; Shriram Finance’s rose 59.4% and its shares lost about 8%. In a nervous week, prices react to what was expected as much as to what was reported.
Why smaller companies move more
Smaller companies have always moved more than large ones, in both directions. Their earnings are less predictable, fewer investors hold their shares, and when the mood turns, selling pushes their prices further. That higher movement is part of the trade an investor makes for their long-run growth potential. It is also why small-cap funds carry a higher riskometer level than large-cap funds.
A sharp fall in small caps does not mean something is broken. It means the risk that was always there became visible for a week.
Who did the buying
Foreign investors sold a net ₹2,697 crore of Indian shares over the four sessions, on NSE’s provisional figures. Domestic institutions, which include mutual funds collecting SIP money every month, bought ₹10,942 crore and were buyers on every day. For October so far, foreign selling of about ₹51,500 crore has been more than matched by domestic buying of about ₹59,100 crore.
What to do this week
One: nothing about your SIP needs to change. When prices fall, the same instalment buys more units.
Two: look at the mix, not the SIP. If this week’s fall felt hard to bear, the useful question is whether the share of mid and small caps in your portfolio still matches your goals and your comfort.
Three: if you applied for the Jio Platforms IPO, which was subscribed about 21 times, allotment is due on 26 October and refunds on 27 October. If you are not allotted, let the money go back to the purpose it was set aside for rather than into a hurried decision. If a near goal or the balance of your portfolio needs a second look, speak to your Relationship Manager.
Figures are from NSE, BSE, the RBI, company filings and market reports by Upstox, Navia, HDFC Sky, Kotak Neo, CNBC and the Associated Press. The full week is in Issue 34 of the Trustner Weekly Market Brief. Trustner Asset Services Pvt. Ltd. is an AMFI-registered Mutual Fund Distributor (ARN-286886) and earns commission on Regular plans; it is not registered under the SEBI (Investment Advisers) Regulations, 2013. This article is for education and is not a recommendation to buy or sell any security or scheme. Mutual fund investments are subject to market risks; read all scheme-related documents carefully.
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Ram Shah is a FPSB-certified CFP professional and founder of Trustner Asset Services (ARN-286886). With over two decades of experience in wealth management, he specializes in SIP strategies, retirement planning, and goal-based investing for Indian families.